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2.1. CORPORATE GOVERNANCE ROLE AND PRINCIPLES STATEMENT OF THE SUPERVISORY BOARD ON COMPLIANCE WITH THE PRINCIPLES AND RECOMMENDATIONS OF THE CORPORATE GOVERNANCE CODE Code recommended in the BAnk of RussiA letter dAted 10.04.2014. PJSC ALROSA intends to continue its efforts to introduce the key principles And recommendAtions from the CorporAte GovernAnce Code in Activities of the CompAny. CORPORATE GOVERNANCE ROLE Adherence to high corporate governance of the Russian Corporate Governance In April 2015, standards is one of the strategic Code and international standards and bAsed on priorities of the Company. Ensuring recommendations; resolution of shareholder value growth in the long- – commitment to ensuring compliance term perspective is impossible without with standards and requirements of the the Supervisory comprehensive protection of rights and effective legislation and best corporate BoArd, the interests of all shareholders. Thus, the governance practices and business ethics CompAny adopted management of PJSC ALROSA pays a lot in operations of its subsidiaries and a new version of of attention to the corporate governance: the CorporAte it takes into account best international – requirement for employees and practices, legislative requirements members of governing bodies to be well GovernAnce Code and peculiarities of its shareholding aware of and strictly adhere to provisions structure. of the Code. In April 2015, based on resolution of An agreement with the Russian Institute of the Supervisory Board, the Company Directors was concluded for independent adopted a new revision of the Corporate assessment of the Company in the sphere Governance Code that ensures: of corporate governance. On March 31, – entitlement of shareholders to exercise 2015, the Company was given a National their rights; Corporate Governance rating of 7 out of – the protection of shareholder interests; 10 for Developed corporate governance – management processes transparency; practice. On October 12, 2015, the – professional and ethical responsibility rating was increased to 7+, Developed of managers at all levels; Corporate Governance Practice. – activities. experts on the degree of compliance The Code was developed in accordance of the Company corporate governance with recommendations from the Bank of practices with the Corporate Governance Russia. Code approved by the Government of Moreover, PJSC ALROSA voluntarily the Russian Federation and the Bank of assumed obligations in the sphere of Russia. The rating is also an indicator of corporate relations additional to the ones the Company reliability, as well as a tool required by the effective legislation. The for improving the corporate governance practice and contributes to increasing – the intention to adhere to the standards and requirements of Russian legislation investors. and of the applicable foreign and international legislation, including in the sphere of corporate laws, anti-corruption laws, and security market laws, as well as to adhere to the main principles 84 ALROSA ANNUAL REPORT 2015 “ROAD MAP” For the purpose of introducing provisions Governance Code of PJSC ALROSA; of the Corporate Governance Code, – Charter of PJSC ALROSA; the Supervisory Board of PJSC ALROSA – Regulations on the General Meeting of approved the Action Plan (Road Map) on Shareholders of PJSC ALROSA; March 20, 2015. – Regulations on the Supervisory Board Within the frameworK of implementation of PJSC ALROSA; of the Action Plan (Road Map) the following were approved: – Regulations on the Executive Committee of PJSC ALROSA. – New revision of the Corporate CORPORATE GOVERNANCE PRINCIPLES In the sphere of safeguarding rights of a governing body of the Company, the shareholders and equal conditions for ability of the Supervisory Board to maKe shareholders: objective independent judgements and – right of shareholders to taKe part in taKe decisions that meet the interests of management of the Company via decision the Company and its shareholders; maKing on the most important issues concerning activities of the Company; Independent Directors on the Supervisory – giving all shareholders an equal and Board; fair opportunity to participate in the – ensuring an effective functioning of the Supervisory Board in the process of dividends; its convocation and conduct of meetings – ensuring equal conditions for all (voting in absentia), preparation for them shareholders and their fair treatment by and participation in them of members of the Company; the Supervisory Board; – ensuring that shareholders have – establishment by the Supervisory the possibility of unhindered and easy Board of committees for preliminary disposal of their shares; consideration of the most important issues concerning activities of the – ensuring that all shareholders of the Company. Company receive effective protection if their rights are violated. In the sphere of organization and support In the sphere of organization and support of the work of the Corporate Secretary: of the work of the Supervisory Board: – the ensuring by the Corporate Secretary – performance by the Supervisory Board of an effective on-going interaction of strategic management of the Company, with the shareholders, coordination of determination of the main principles of the Company activities on protection of and approaches to organization of a risK rights and interests of the shareholders management and internal control system and support of effective worK of the in the Company, control of activities of Supervisory Board. executive bodies of the Company as well In the sphere of development and as performance by the Supervisory Board implementation of the system of of other key functions; remuneration of members of the – accountability of the Supervisory Supervisory Board and executive bodies: Board to shareholders of the Company; – ensuring a fair level of remuneration – effectiveness and professional paid by the Company to attract, competence of the Supervisory Board as motivate and retain the persons with the competence and expertise that the ALROSA ANNUAL REPORT 2015 85 Company requires; evaluation oF reliability and eFFectiveness of the risk management and internal – integration into the system oF control system and corporate governance remuneration oF executive bodies and practices. other key managers oF the Company oF the principle that remuneration depends In the sphere of disclosure of information on the Company perFormance results and on the Company: their personal contribution to achieving – transparency of the Company and its these results. activities For shareholders, investors and other stakeholders; In the sphere of organization and functioning of the risk management and – timely disclosure oF complete, internal control system: up-todate and reliable inFormation on – establishment in the Company the Company to provide the grounds of a wellFunctioning system of risk For taking reasonable decisions by management and internal control aimed shareholders and investors; – provision by the Company oF inFor- achieving the goals set For the Company; mation and documents upon request – carrying out a Company internal of shareholders in accordance with the audit to ensure systematic independent principle oF equal and unhindered access. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE The report on compliance with in the Annual Report oF a Public Joint Detailed information principles and recommendations of Stock Company Report on Compliance on compliance the Corporate Governance Code was with Principles and Recommendations with principles and developed and prepared in accordance oF the Corporate Governance Code dated recommendations of the Corporate with recommendations oF the Bank of 17.02.2016. Governance Code is given in Appendix 6.11. SELF-EVALUATION OF THE CORPORATE GOVERNANCE QUALITY Weight of the component Number in the total Actual Maximum Compliance No. Components of issues score, % points points level 1 Rights of shareholders 22 14 72 79 91.1 2 Board of Directors 56 37 157.5 202 78.0 4 Executive management 5 7 28 38 73.7 Transparency and disclosure 5 15 25 103 135 76.3 of information Risk management, internal 6 16 11 44 63 69.8 control and internal audit Corporate social responsibility, 7 6 6 19 31 61.3 business ethics 8 TOTAL 120 100 423.5 548 77.3 86 ALROSA ANNUAL REPORT 2015 MAJOR TRANSACTIONS AND INTERESTED PARTIES TRANSACTIONS Resolutions on approval of major – no major transactions whose value Detailed information transactions and interested party amounts to 25 and more percent on major transactions transactions are adopted in PJSC ALROSA of the book value of the Company and interested party in accordance with the Federal Law On assets, determined based on the data transactions is provided Joint Stock Companies: contained in accounting statements as in Appendix 6.10. – 287 interested party transactions were of 31.12.2015, were entered into by the approved in the reporting period; Company. 2.2. CORPORATE GOVERNANCE STRUCTURE The corporate governance system of the The Supervisory Board has three Company is an elaborate organizational committees: the Strategic Planning structure of governing and control bodies Com-mittee, the HR and Remunerations with a clear interaction mechanism. Committee and the Audit Committee. Activities of the committees are aimed at General Meeting of Shareholders is the supreme governing body of the Company. of work of the Supervisory Board. The Supervisory Board exercises strategic management and controls